Case Details
- Citation: [2010] SGCA 36
- Case Title: MFM Restaurants Pte Ltd and another v Fish & Co Restaurants Pte Ltd and another appeal
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 18 October 2010
- Court Coram: Chao Hick Tin JA; Andrew Phang Boon Leong JA; V K Rajah JA
- Case Numbers: Civil Appeals Nos 169 and 171 of 2009
- Judgment Length: 48 pages; 31,329 words
- Legal Areas: Contract; Damages
- Plaintiff/Applicant (Respondent in CA): MFM Restaurants Pte Ltd and another
- Defendant/Respondent (Appellants in CA): Fish & Co Restaurants Pte Ltd and another
- Parties (as described in the extract): MFM Restaurants Pte Ltd and another — Fish & Co Restaurants Pte Ltd
- Counsel for Appellants: Lau Kok Keng and Wendy Low Wei Ling (Rajah & Tann LLP)
- Counsel for Respondent: Tony Yeo Soo Mong and Rozalynne Asmali (Drew & Napier LLC)
- Related High Court Decision (appeal arose from): Fish & Co Restaurants Pte Ltd v MFM Restaurants Pte Ltd and another [2010] 1 SLR 1104
- Other Cases Cited (from metadata): [2009] SGHC 141; [2010] SGCA 36; [2010] SGHC 33
Summary
This appeal concerned the assessment of damages arising from breaches of a settlement deed entered into after litigation between a restaurant chain and a former employee. The Court of Appeal affirmed that damages in contract are governed by orthodox principles of causation and remoteness: the claimant must show that the loss claimed was caused by the breach, and the loss must not be too remote. The case is notable for its detailed discussion of how courts should approach causation in commercial settings where multiple factors may have affected the claimant’s performance.
On the facts, the Court of Appeal accepted that there were “clear – and continuing – breaches” by the defendants (the appellants before the Court of Appeal) of undertakings that were central to the claimant’s “Fish & Co” restaurant concept. However, the appellants argued that the claimant’s losses were unconnected with those breaches, and that the claimant was already experiencing a decline in sales. The Court of Appeal also addressed a further, more subsidiary argument on post-breach loss and remoteness, including the relevance of a House of Lords decision that the appellants relied upon to suggest a different legal orientation.
What Were the Facts of This Case?
The respondent, Fish & Co Restaurants Pte Ltd (“Fish & Co”), owned a chain of seafood restaurants branded “Fish & Co”. The first appellant, MFM Restaurants Pte Ltd (“MFM”), owned a competing chain known as “The Manhattan Fish Market”. The second appellant, Dickson Low (“Dickson”), was a former employee of Fish & Co. During his employment, Dickson had agreed to confidentiality obligations and non-competition restrictions, including a prohibition on helping to set up restaurants other than Fish & Co during his employment and for two years after resignation.
After Dickson resigned, he became involved in setting up MFM’s business. The first MFM restaurant opened in Malaysia in 2002, and additional restaurants followed. Fish & Co brought proceedings against Dickson in March 2004, alleging breaches of the non-competition obligations by using and divulging confidential information and copying Fish & Co’s concepts. The parties ultimately settled, and on 27 April 2005 they entered into a settlement deed (“the Settlement Deed”). Although MFM and its Malaysian counterparts were added as parties to the Settlement Deed, they were not originally parties to the suit.
The Settlement Deed contained multiple undertakings designed to protect the essence of the Fish & Co concept. For present purposes, the deed included restrictions on: (i) the use of serving pans identical and/or similar to those used by Fish & Co; (ii) the use of slogans and/or jingles identical or confusingly similar to Fish & Co’s; (iv) the use of certain words and/or phrases described in a schedule; and (v) the use of a completely different garlic lemon butter sauce (the “MFM Sauces”) as compared to Fish & Co’s “O.B. Sauces”. The undertakings were to take effect at different times: slogans and phrases from 27 April 2005, sauces from 27 July 2005, and pans from 27 August 2005.
Fish & Co alleged that MFM breached these undertakings almost immediately. In particular, it alleged that MFM used the slogan “One bite and you’re hooked” on menus; used phrases such as “Garlic Lemon Butter”, “Lemon Butter” and “Creamy Garlic Lemon” on its website; failed to use completely different sauces; and used serving pans similar to Fish & Co’s. These allegations were linked to MFM’s opening of its first Singapore outlet at Plaza Singapura on 20 May 2005, located very close (0.28 km) to Fish & Co’s Glass House outlet at Penang Road.
On 20 September 2005, Fish & Co commenced proceedings for breach of the Settlement Deed, seeking an injunction and damages. The parties later entered into a consent judgment on 27 November 2006, with damages to be assessed and an injunction granted. The injunction was structured to align with the Settlement Deed undertakings: MFM was restrained from using similar pans from 1 January 2007, from using the restricted slogans and jingles forthwith, from using the restricted words and phrases forthwith, and from using the MFM Sauces after 11 January 2007. MFM ceased using the disputed pans on 28 December 2006. While there were disputes about compliance with the sauce undertaking by January 2007, Fish & Co did not claim damages for breaches after January 2007, focusing the damages assessment on the pre-cessation period.
What Were the Key Legal Issues?
The Court of Appeal framed the appeal around the assessment of damages in contract, emphasising that damages are not a mechanistic exercise. The central issues were causation and the extent to which Fish & Co’s claimed losses could be attributed to MFM’s breaches of the Settlement Deed. The appellants argued that even if they had breached the deed, Fish & Co’s loss was unconnected with those breaches.
A second issue was the appellants’ “fallback” argument that Fish & Co was the “main author” of its own loss. In substance, the appellants contended that Fish & Co was already suffering a decline in sales independent of the breaches. If accepted, this would limit the damages recoverable, because the claimant would not be entitled to substantial compensation for losses not caused by the breach.
Third, although described as more subsidiary, the appellants raised an argument about remoteness of damage in relation to the post-breach situation. They contended that some losses allegedly caused after the breaches were too remote. The Court of Appeal noted that this issue raised the spectre of a recent House of Lords decision that, at least in part, appeared to depart from long-standing principles endorsed by Singapore courts. The Court therefore considered it necessary to address the legal proposition because it could, if correct, require a significant shift in the law of remoteness.
How Did the Court Analyse the Issues?
The Court of Appeal began by emphasising the practical importance of damages assessment to plaintiffs, while also underscoring that the process is guided by legal rules and principles rather than by intuition. In contract cases, the claimant must establish a sufficient causal link between the breach and the loss claimed. The Court’s approach reflects the idea that causation is often the hardest part of damages assessment, particularly where commercial performance may be influenced by multiple factors.
On causation, the Court accepted that the breaches were “clear” and “continuing”. The undertakings in the Settlement Deed were not incidental; they were described as reflecting the “essence” of the Fish & Co concept. The Court therefore treated the breaches as breaches of specific contractual promises designed to prevent MFM from appropriating the distinctive elements of Fish & Co’s branding and product presentation. This context mattered because it supported the inference that the breaches were capable of affecting customer perception and sales, rather than being merely technical non-compliance.
However, the Court also recognised that causation is not established merely because a breach occurred. The appellants’ argument that Fish & Co’s loss was unconnected with the breaches required the Court to examine whether the evidence showed that the sales decline (if any) was driven by other factors. The Court’s analysis thus focused on whether Fish & Co’s performance during the relevant period could reasonably be attributed to the competitive impact of MFM’s non-compliant use of slogans, phrases, pans, and sauces, or whether the decline was already underway for reasons unrelated to the breaches.
In addressing the “main author” fallback argument, the Court treated the issue as one of causation and apportionment in substance. If Fish & Co’s sales decline was already occurring independently, then the damages claim would need to be reduced to reflect the portion of loss not caused by the breach. The Court’s reasoning indicates that where a claimant’s loss is partly attributable to pre-existing trends, the damages recoverable should reflect the incremental loss caused by the breach, not the entire decline. This is consistent with orthodox contract damages principles: the claimant is entitled to be placed in the position it would have been in had the contract been performed, but not to recover losses that would have occurred anyway.
On remoteness and post-breach loss, the Court acknowledged that the appellants relied on a House of Lords decision that appeared to suggest a different legal orientation. The Court of Appeal approached this carefully, noting that Singapore law had endorsed long-standing principles for over a century and a half. The Court therefore considered whether the House of Lords proposition should be adopted or distinguished. While the extract provided does not include the detailed discussion of the House of Lords case, the Court’s framing makes clear that it viewed remoteness as a principled constraint on damages, ensuring that liability does not extend to consequences that are not sufficiently connected to the breach in a legal sense.
Overall, the Court’s analysis reflects a structured application of contract damages doctrine: (1) identify the breach and the contractual promises violated; (2) determine whether the claimed losses were caused by those breaches; (3) consider whether the claimant’s own circumstances or pre-existing trends break the causal chain or require reduction; and (4) apply remoteness principles to ensure that damages do not extend beyond what the law permits. The Court’s emphasis on fairness and on the implications for future litigants underscores that damages assessment must be both legally principled and evidentially grounded.
What Was the Outcome?
The Court of Appeal upheld the High Court’s approach to the assessment of damages and dismissed the appellants’ arguments that causation was absent or that Fish & Co was not entitled to substantial compensation. The Court affirmed that MFM’s breaches of the Settlement Deed were capable of causing loss and that Fish & Co was entitled to damages for the period before compliance under the consent injunction took effect.
Practically, the decision confirms that in settlement-deed disputes involving restrictive undertakings, courts will scrutinise causation closely but will not allow a defendant to avoid liability merely by pointing to general market decline without demonstrating that the decline was independent of the breach. The Court’s treatment of remoteness also signals that Singapore courts will carefully consider foreign developments but will not readily depart from established principles without compelling justification.
Why Does This Case Matter?
MFM Restaurants v Fish & Co is significant for practitioners because it illustrates how Singapore courts handle damages assessment in contract cases where the breach involves competitive conduct and branding elements. The case demonstrates that causation is not presumed from breach alone, yet the contractual context—particularly where the undertakings protect the “essence” of a business concept—can strongly inform the evidential assessment of whether the breach likely affected sales.
For litigators, the decision is also a reminder that arguments about pre-existing decline and “main authorship” are, in substance, arguments about causation and the counterfactual. Defendants who contend that the claimant would have suffered the same loss anyway must marshal evidence showing that the loss trend was already established and not materially driven by the breach. Conversely, claimants should be prepared to show an evidential link between the breach period and the claimed downturn, and to explain why the counterfactual supports their damages computation.
Finally, the Court of Appeal’s engagement with remoteness and its willingness to address a potentially disruptive House of Lords proposition underscores the importance of staying current with developments in comparative jurisprudence while recognising Singapore’s commitment to legal continuity. The case therefore serves as a useful authority on how Singapore courts balance doctrinal stability with careful consideration of persuasive foreign reasoning.
Legislation Referenced
- None expressly stated in the provided extract.
Cases Cited
- [2009] SGHC 141
- [2010] SGCA 36
- [2010] SGHC 33
Source Documents
This article analyses [2010] SGCA 36 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.